■ Hull expressed the belief that by low- 

 ering tariffs horizontally and treating 

 all nations alike with respect to trade, 

 quotas and embargoes now in effect in 

 so many countries, could be broken down 

 and world trade restored. 



That President Roosevelt leans toward 

 the views expressed by Mr. Peek is seen 

 in the following statement taken from 

 the President's message to the London 

 World Economic Conference in July 1933. 

 "I do not relish the thought that 

 insistence on such action (currency 

 stabilization) should be made the ex- 

 cuse for continuation of the basis 

 economic errors that underlie so 

 much of the present world-wide de- 

 pression." • • • "The sound internal 

 economic system of a nation is a 

 greater factor in its well-being than 

 the price of its currency in changing 

 terms of currencies <»f other na- 

 tions." • * • "We must rather miti- 

 gate existing embargoes to make 

 easier the exchange of products of 

 which one nation has and the other 

 has hot." 



"There are as many people in the 

 world with human necessities and desires 

 as before the depression," continued the 

 speaker. 



"There is no lack of productive ca- 

 pacity. 



"There is one great obstacle — the 

 breakdown of the money system in inter- 

 national trade. 



"Nevertheless, we want to trade, we 

 can trade, and Congress intended that we 

 should trade. To accomplish this purpose 

 it authorized the President to enter .up- 

 on reciprocal trade agreements with 

 other countries, and as a bargaining 

 Aneapon empowered him in such agree- 

 ments to make changes up to 50% in 

 existing tariff duties. It further author- 

 ized him to withhold the benefits of such 

 tariff changes from any country because 

 of its discriminatory treatment of Amer- 

 ican commerce or because of other acts 

 or policies which in his opinion tend to 

 defeat the purposes set forth, in this 

 section. These are broad bargaining 

 powers. They were meant to be so. The 

 emphasis of the bill is upon trade, trade 

 of goods for goods, on a reciprocal basis. 

 I think that this approach is the correct 

 one." 



Tracing the economic history of Eng- 

 land, Mr. Peek showed how Britain had 

 prospered under a free trade policy so 

 long as she was largely industrial and 

 could trade her industrial goods ^or agri- 

 cultural products and raw materials pro- 

 duced in foreign countries. But when 

 other countries became industrialized, he 

 pointed out, England's traditional free- 

 trade policy did not work so well. And 

 so within the past few years after a ■ 

 thorough investigation and report by ex- 

 perts, Great Britain completely reversed 



her trade policy and voted protection 

 both for her industry and for her agri- 

 culture. "She went off gold in September 

 1931 and adopted a managed currency 

 both to correct her internal price levels 

 and to meet tlie new conditions in her 

 foreign trade and financial situation. 



"She returned to the practice of keep- 

 ing detailed books upon her foreign com- 

 mercial and financial transactions, coun- 

 try by country, a system which she had 

 abandoned with the adoption of the sup- 

 posedly automatic gold standard. 



England's New Policy 



"She proceeded to strengthen and' 

 build up her economic relations with her 

 various dominions upon a basis of mu- 

 tual interest through the Ottawa Agree- 

 ments and other arrangements. 



"She further adopted a policy of mak- 

 ing similar special commercial and fi- 

 nancial arrangements with other nations 

 wherever she c Id upon a basis of mu- 

 tual interest — 'Buy from those who buy 

 from us.' 



"Along with free trade and the gold 

 standard, she moved away from the un- 

 conditional mo.st-favored-nation policy 

 which she had been instrumental in ad- 

 vancing in previous decades and de- 

 clared for a conditional most-favored- 

 nation policy. 



"I pause for a moment to mention the 

 difference between the conditional and 

 unconditional 'most-favored-nation pol- 

 icies, for there is an important distinc- 

 tion which is not always recognized or 

 understood. 



"Most-favored-nation treatment means 

 that we promise to nations with whom 

 we make commercial agreements that we 

 will extend to them as favorable treat- 

 ment with respect to tariff duties and the 

 like as we do to any other country and 

 they in turn promise to give us cor- 

 responding treatment as regards our 

 goods. Sometimes, however, two nations 

 make tariff bargains whereby they ex- 

 tend special tariff and other concessions 

 to each other on a quid pro quo basis. 



"Under the conditional most-favored- 

 nation policy we would stand prepared to 

 give those same concessions to any third 

 nation, provided that nation makes to us 

 corresponding concessions, whereas, un- 

 der the unconditional most-favored-na- 

 tion policy, we automatically extend 

 those same concessions without demand- 

 ing specific equivalent concessions from 

 the tmrd nation. 



"In theory the unconditional most-fa- 

 Tored-nation principle is designed to re- 

 duce tariff and other barriers to trade. 

 In practice, however, it is noteworthy 

 that the attempt of many nations to 

 make it the basis of their foreign trade 

 policies has been accompanied by their 

 increasing use of devices such as quota 

 systems, exchange controls, trick classi- 



fication of commodities, and so forth, 

 which, in effect, defeat the purpose of the 

 unconditional most-favored-nation theory, 

 and lead to a multiplication of the trade 

 barriers which it was meant to reduce. 



"England's new policy is based upon 

 a frank recognition of the fundamental 

 changes in world conditions, and has re- 

 sulted in a definite improvement in Eng- 

 land's specialty of foreign trade and a 

 material contribution to her national re- 

 covery. Thanks to the exact knowledge 

 she has of her trade relations with every 

 individual nation, and to her organiza- 

 tion for over-seas trade, she is able to 

 act with precision when occasion de- 

 mands: witness the Roca Agreement with 

 Argentina and the recent Anglo-German 

 agreement. 



"England is not only gaining a greater 

 share of world trade but is also obtain- 

 ing payment, in part at least, upon her 

 large foreign investments. Recent state- 

 ments by the British Chancellor of the 

 Exchequer and other officials indicate 

 that the results of England's change of 

 policy have proved highly g:ratifying to 

 her. 



"The moral of all this should be ob- 

 vious, for England's example is an im- 

 pressive one. When England saw her 

 national interests threatened by theories 

 such as free trade, the gold standard and 

 the unconditional most-favored-nation 

 policy, she did not hesitate to depart 

 from them even though they had long* 

 served her purpose. 



What Other Nations Have Done 



"Similarly other nations have been • 

 prompt to protect their national econ- 

 omy and to make their foreign trad* 

 serve their general national purposes by 

 various measures such as high protective 

 tariffs, quota systems, exchange controls 

 and special agreements. . . . We haTt 

 knowledge of over 200 bilateral agree- 

 ments, not counting barter transactions, 

 and not counting the many hundreds of 

 unilateral actions, from the benefits of 

 which the United States is excluded. It 

 is reasonable to assume that these agree- 

 ments could not and would not have been 

 made unless the nations making them 

 felt that they were to their mutual ad- 

 vantage. Furthermore, reliable figure* 

 show that the greatest gains in inter- 

 national trade have been made by the 

 nations which have pursued the policy of 

 making special agreements and that 

 these gains have been made largely at 

 the expense of the United States. 



"The United States has not kept up 

 with the procession. To some extent we 

 ha\'e taken action similar to that taken 

 by Great Britain. It is in the field of 

 effective organization of our foreign 

 trade and of making foreign tfade agree- 

 ments to correspond with eur present 

 (Continued on page 24) 



want 1 



14 



1. A. A. RECORD 



